The Advance GDP reading (first estimate) of third quarter GDP comes out tomorrow.
Here’s a recap of six GDP estimates plus a bonus opinion as to what constitutes “solid” GDP growth.
Current Estimates
- GDPNow 3rd Quarter: 2.1%
- FRBNY Nowcast 3rd Quarter: 2.2%
- Markit 3rd Quarter: 1.0%
- Econoday 3rd quarter consensus: 2.5%
- Markit 4th quarter: 2.0%
- FRBNY Nowcast 4th quarter: 1.4%
“Solid” GDP Expected
The Econoday consensus for the first estimate of third-quarter GDP is plus 2.5 percent, a solid rate that what would be the highest in five quarters. Consumer spending is expected to be solid but still down from the second-quarter’s very strong 4.4 percent annualized growth rate. Nonresidential investment was a plus in the second quarter but is expected to be a negative in the third quarter. The GDP price index accelerated sharply in the second quarter reflecting energy prices, to plus 2.3 percent from the second quarter’s plus 1.4 percent but is expected to move sharply lower in the third quarter, to a consensus plus 1.5 percent.
New GDP Definitions
Is 2.5% the new “solid” standard for GDP growth? When did that happen?
Mike “Mish” Shedlock
All Gaseous and Garters.
Solid – liquid – gas: Makes me think about an underwear change, It’s soooo gastrointestinal. What’s your favorite excretion?
I hear they’re trying to skip a step and go with sublimation – the GDP and the economy goes straight from solid to a gas.
Sort of like explosive diarrhea?
After that … QE.
Simon Kuznets, who invented the modern concept of the Gross Domestic Product, warned that “The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.”
GDP can be measured by production, income or expenditures. Theoretically each method should obtain a similar result.
The expenditures method includes government spending on goods and services and also includes employees salaries and weapons.
Yes, subtract out all government spending, salaries, fringe benefits, and pensions, and GDP will probably be -2.5%…
It is a shame that people get so trans fixed on numbers like quarterly GDP estimates when they miss the big picture of the GDP growing at less than the rate that it used to grow 60 years ago; further neglecting that back then National Debt was shrinking as a portion of GDP and now it is growing faster than GDP. Myopia anyone?
Don’t worry. t’s not that the numbers are made up, it more a combination of statistics, goal seeking, and public relations. They’re the best numbers available and better that anything that might come from a professional politician. Mostly, The best we can hope for is they’re not simply official propaganda intended to keep the population under control. That won’t be for a few more years
Now, let’s go out and buy some ObamaCare. I hear it’s pretty good.
Might want to track nominal GDP.
The deflator BLS used in Q2 a full percent lower than CPI for quarter.
I define solid good GDP as when interest rates are back to five percent, and savings accounts pay interest that is above the real rate of inflation. Until then, just funny numbers.
I like the way you think. I’m old enough to remember 8% savings account IRAs and thinking they were an OK deal if you were desperate.
I remember walking down a street and seeing ‘12%’ on a bank window and the word ‘ impossible’ came to mind…but then people lived with what they had and you could afford a life.
Now I read ‘-0.5%’, unemployment very high, empty housing that no one can or will buy, with only more debt and subsidy to cling to as people try not to lose the money they have already spent and the relics of what it once bought.
Wonder what the encore will be.
Explosive QE comes to mind.
After the economy disintegfates, economists will discover the 4th state of mayter. Plasma.
Then the economists will figure out how to make it mathy. Then the Fed will peddle it and turn it into bubble plasma while denying they had anything to do with it. Wall Street will sell plasma derivatives. Schmucks will buy them. Bloomberg TV will devote quality time to them.
Plasma? Hmm reminds me of “Ghostbusters”. Hit ’em with the plasma! More plasma! Pretty much the way the gov & fed are fighting the economic ghosts.
When the numbers don’t come out to your liking, redefine the parameters until they do.
What’s new. When the statistic gets out of line change the formula. Inflation anyone? Unemployment anyone? GDP calculated as done in the Reagan admin? Long live the Deep State!